When a person doesn’t pay their debts, creditors often take action. A utility company may cut off the power to a delinquent borrower’s home, or a mobile phone company may disconnect someone’s data. There are situations, though, when it seems impossible to take something away from a borrower, such as when the creditor is a credit card company.
The borrower has already borrowed the money and now is not returning it. It may seem like the credit card company has no recourse other than continuing to ask for payment. This isn’t necessarily true, though. The law does give the creditor the right to garnish the wages of the borrower – this is a method of payment that automatically deducts money from a person’s paycheck and transfers it to a creditor.
However, there are rules the creditor must follow if they wish to garnish a borrower’s wages.
Wage Garnishment Laws in Florida
According to Florida statute 222.11, creditors have the right to garnish a person’s wages if they are in debt. Whether or not they can do it, and how much they can garnish, depends on the status of the borrower in their own household. If they are considered to be the head of the household, certain income is exempt from wage garnishment. Those not considered to be the head of household do not have any portion of their income exempt from wage garnishment.
Heads of household automatically have $750 of their disposable earnings every week exempt from wage garnishment. In the event that the head of household makes more than that, any remaining earnings are also exempt. The only exception to this is when the individual has signed a waiver stating that in the event of default, the creditor has the right to garnish that remaining income.
This is important. At the beginning of a credit relationship, the borrower will have many forms to sign. One of these is possibly a waiver signing over a borrower’s income in case of default. Borrowers are often so eager to get the loan or credit that they sign everything without giving all forms a thorough reading. If a borrower does sign this waiver, in the event of default, the creditor has the right to garnish any income over $750 at a rate of 25 percent.
The borrower may have recourse, though, if the waiver does not meet the requirements set out in Florida law. According to the statute the waiver must:
- Be written in the same language as the contract the waiver relates to;
- Be a document separate from but attached to the contract the waiver relates to; and
- Clearly indicate what the waiver is for and that the borrower is signing over exemption rights.
The waiver must be written in clear language that clearly identifies its purpose. If borrowers have any questions about what the waiver, or any other part of the contract, says, they should speak to a lawyer who can help explain the verbiage. An attorney can also look over the entire contract and the waiver to ensure borrowers are not signing away rights or agreeing to unfavorable terms.
Rules for Other Income Earners
When there is another person in the household that earns an income, but that person is not considered to be the head of the household, the rules change.
Florida law pertaining to these individuals mirrors the law found in the federal Consumer Credit Protection Act. Under this law, creditors can only garnish 25 percent of a person’s wages, or 30 times the minimum wage, whichever amount is less.
Income earners in the household who are not considered to be the head of household are not given the same opportunity to keep their income unless the right is waived. Any creditor can garnish these wages if the borrower defaults on a repayment agreement.
When many people think of wage garnishment, they often only consider that a creditor can take money from their paycheck. However, a creditor may also garnish money that’s in the bank. This is only the case when that money is traceable and the borrower can prove that it is income. When this is proven, 75 percent of those funds are exempt from garnishment. For example, if a person has savings of $10,000 in the bank that they have accrued through their earnings, $7,500 of that is exempt from garnishment.
While this sounds like good news, that exemption no longer applies when the bank account holds traceable income in addition to other funds. For example, if someone had the same $10,000 in the bank and an additional $10,000 in inheritance in the same account, the exemption for traceable income would no longer apply. Instead, the creditor will have the right to garnish 25 percent of the entire $20,000.
How Bankruptcy Can Help
Having your wages garnished is incredibly frustrating. You work very hard all week only to earn just a portion of your income. For some borrowers, though, filing for Chapter 7 bankruptcy may help.
After filing for Chapter 7 bankruptcy, most creditors must stop their collection attempts. This includes wage garnishment. In some instances, when a person has already had some of their wages garnished, they are sometimes able to recoup those wages. This is not always as easy as it sounds, though, so those considering the option should speak with an attorney who can help.
Have Your Wages Been Garnished? Contact a Florida Bankruptcy Lawyer Who Can Help
While bankruptcy is often an answer when a person’s wages are being garnished, both wage garnishment and bankruptcy are very serious things that no one should take lightly. Anyone facing either situation needs to speak to a Fort Lauderdale bankruptcy lawyer who can help.
If your wages have been garnished, or you’re simply in debt and think bankruptcy is possibly right for you, contact Loan Lawyers at (954) 523-HELP (4357) today. We will explain all the options you have and advise on which one might work best for your circumstances. These are very serious issues, and trying to tackle them on your own may land you in more financial trouble. Don’t take the chance. Call us today or fill out our online form for your free consultation.
Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.